In a first, Kerala imposes ‘fat tax’ on pizzas, burgers

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FROM A 14.5 per cent “fat tax” on pizzas, burgers and other junk food and establishing “Kerala Renaissance cultural complexes” and multi-purpose indoor stadiums in every district, to giving a push to infrastructure development through extra-budget resource raising, the maiden budget of the CPM-led government under Pinarayi Vijayan offers a blend of populism with measures aimed at restoring the state’s broken finances.

The budget presented by Kerala’s Finance Minister T M Thomas Isaac Friday allotted Rs 100 crore for these complexes that will house theater spaces, galleries, concert and seminar halls, bookshops and other such facilities.

The indoor stadiums — for which an amount of Rs 500 crore has been earmarked in the current fiscal — will similarly be named after prominent sports-persons hailing from the respective districts, including footballers I M Vijayan and Thomas Sebastian, volleyball legend Jimmy George and athletes Suresh Babu and K K Premachandran.

The “fat tax” on junk foods sold through fast food chains such as McDonalds and Pizza Hut is the first ever such impost by any government in India. This tax, aimed at discouraging consumption of foods linked to obesity, was first introduced by Denmark in October 2011, only to be scrapped after about a year. Others such as France, Hungary, UK and Finland have imposed sugar taxes on sugary drinks and confectionaries. Kerala’s people may not take kindly, however, to a 5 per cent tax levied on coconut oil. Isaac defended the levy, saying that the revenues from it will be earmarked for procurement of copra from coconut growers.

Isaac’s budget also set aside Rs 1,000 crore for setting up a school of “international standard” in all the 140 Assembly constituencies and a pension scheme — again a first — for transgenders aged above 60 years. This comes just days after the Kochi Metro Rail Ltd announced a decision to extend employment opportunities to members of the community.

The Finance Minister also proposed Rs 12,000 crore of investments in infrastructure, the funds for which would be raised outside the budget by the Kerala Infrastructure Investment Fund Board (KIIFB), a government-owned financial institution. KIIFB would issue bonds, raise term loans from banks and creating funds having approval from the SEBI and RBI. The state government would stand guarantee for the funds mobilised by the KIIFB, which would be used mainly for land acquisition in major road works, GAIL pipeline and industrial parks.

Isaac said the growth rate of the state has gone below the national average for the first time in the last two decades. The gulf crisis coupled with the fall in the prices of natural rubber would halt the surge in Kerala economy, which started in the second half of 1980’s, he said.

Despite the crisis, the government announced a lot of welfare schemes, which included pension for workers of MGNREGS, who are above the age of 60. The gambit of free rice through the PDS system and many other welfare measures has been widened to include more from the weaker sections in society. At the same time, no new posts or departments would be created in the next two years due to the financial constraints.

He said the revenue deficit of the state for the current fiscal would be Rs 13,066 crore. The state is entitled for obtaining Rs 17, 926 crore as public debt (through sale of securities of 10-year tenure) in the fiscal. Hence, 73 per cent of the proceeds taken through the public debt would have to be used for meeting the revenue deficit.

About the Author

Syed Ammar Alavi - is Lahore (Pakistan) based journalist & writer with 25-year experience in print, wire and broadcast forms of journalism. His major fields of interest are politics, film,tv,sports, climate change and technology